Top 7 Reasons Why You Should Use a Credit Card

While waiting in the queue to pay for my weekly purchases, I noticed this brief interaction between the counter clerk and the customer. The counter clerk asked the customer if he was paying for the purchase in cash or card, to which the customer replied, “Card. Credit card.” and he flashed the shining piece of plastic at the counter clerk.

My friend, who was standing behind me in the queue whispered to me, “Look, he is using a credit card. Either he is rich, or he is dumb.”

Credit cards are infamous for their bad reputation as the worst form of borrowing that one can make. They come with high interest rates which can lead to insurmountable debts if not used properly.

But if you can use it the right way, a credit card is more of a boon than a curse for your financial well being.

If you don’t know the right way to use a credit card, then ask yourself, “What am I spending most of my money for? And, can I make use of a credit card to pay for it?”.

If your answer is a big YES, then follow this article to know why you should use a credit card.

1. Cashback and Reward points

Generally, most of the credit cards come with a cashback or a reward point scheme. If not, at least the card meant for shopping and lifestyle purchases will have a cashback or a reward point scheme or sometimes even a combination of both.

Cashbacks can vary from 0.5 to 2% on general purchases and up to even 10% on specific purchases. While some cards may limit the amount you can earn through cash backs, most of the cards don’t have that.

Reward points accumulate in your credit card account while you make a purchase using your credit card. You can redeem these later in exchange for a discount, gift cards, merchandise, or additional services.

And reward points are usually worth 2% or less than the amount you use for purchases.

As long as you’re getting back something extra for free, does it matter how much you’re getting? If it does matter, you should consider spending more so that you get more.

2. Consumer protection

This is my favorite reason to own a credit card.

If you make a purchase with your credit card, and you receive a defective product that the vendor is refusing to take back, you can avail of help from your credit card company to handle the dispute on your behalf.

Most companies will take up the matter and resolve the issue by getting you a fair deal or by reimbursing your amount.

You’re also getting inbuilt protection against card theft. If someone steals your card or someone makes a fraudulent transaction using your card number, you can notify your card company, and they will block the card instantly. You don’t have to pay for the transaction until the investigation is over and so your money is safe in your bank account.

At times, the card company even reimburses you for the purchases made after your card was stolen.

3. Free Insurance

Most credit cards come with an insurance plan of some form or the other. These can include anything from travel insurance, insurance on the rented car, accidental death insurance, extended warranties for products that exceed the existing warranty, and much more.

4. Credit history

Credit card companies report your payment details to the credit rating agencies, which allows a credit score according to your usage.

Using your credit card to purchase and paying it within the due date will help in building your credit score. Spending within the card limits also help in improving your credit score.

A good credit score will help you in obtaining a credit card with better bonuses or even in smooth sanctioning of your personal loan from the bank.

5. Earn more by delaying payment

When you make a purchase using your credit card, your money remains in your bank account until the due date.

There are short term deposits lasting two weeks to a month where you can deposit your money to earn a little interest for that period.

So, instead of paying for your purchases directly, make use of these deposits to earn that little extra money. Then, you can pay for the purchases made with your credit card within the due date and gain more money even though little.

6. Helps in budgeting

Credit card companies keep track of your purchases made using the card.

So, how can you make use of it?

Make sure that you plan your purchases within your income for the coming month. This will ensure that you don’t overspend and you will have enough money to repay before the due date.

Now make all the essential purchases using your credit card, and make use of the report to track the purchases made for the month.

In the process, you’re also earning cashback and reward points for the purchases made.

7. Universally accepted

If you’re a tourist or someone who does international transactions, you might know the importance of a credit card.

Most of the rental car companies and hotels accept only credit cards for payment as it makes it easier to charge more for any damages caused by you.

Even online subscriptions and other e-commerce purchases can only be made using a credit card for the protection that the card provides in case of any default from your side.


There are many more perks like free air miles, free fuel surcharge, free hotel stays, free premium lounge access, etc. that you can avail of using a credit card. But, these vary from card to card according to the usage or membership fee.

Credit cards are best for people who are financially disciplined and can pay off their dues within the due date. It is a burden only for those who cannot control their splurging and end up drowning under insurmountable debt.

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